ACHIEVEMENTS AND CHALLENGES OF MICROFINANCE INSTITUTION IN ETHIOPIA (THE CASE OF ADDIS ABABA) (MANAGEMENT PROJECT TOPICS AND MATERIALS)
ABSTRACT
This paper presents achievements and challenges of Microfinance Institutions in Addis Ababa, Ethiopia. When traditional financial institutions have failed to provide the service to help the poor, MFIs were developed to fill this gap. The research address their institutions working in Addis Ababa.
The author’s interest in this topic was enhanced through her personal experiences of living in Ethiopia were examples of acute poverty were abundant. As a poor and developing country, there are many households who lack food to eat and many daily needs. Couple with the economic crisis in 1990s and hunger crisis in early 1980s, life has never been easy with many and till date many are still struggling to meet up with life. This is worst in the rural areas where farmers live a hand to mouth life. Many parents also lacked the means to sponsor their children at school because of low income. The type of farming that many do is for subsistence hence, what they are doing really improving their life and removing them from the poverty line. When microfinance started n the 1990s, the aim was to alleviate people from the low income. So we need to examine how the microfinance concept has helped in dealing with poverty and what has been achieved so far.
The data for the study was gathered from primary and secondary sources, and various rations and indicators were used to measure the performance of the Microfinances institutions. The data from 2002-2007 was used to see the trend in the performance.
In conclusion, all the MFIs studied were not sustainable and profitable without subsidies. The most MFIs studied are strong performers in outreach but are very weak when it comes to ROE. All the MFIs studied did not have an MIS system to finally automate their operation; the trend in the performance of microfinance institutions during those years of operation was encouraging.
Keywords
Microfinance, microfinance institution, microenterprise, microfinance Policy, National Bank of Ethiopia, Grameen Bank, World Bank, world fact book, Miscellaneous
